A new study by OC&C Strategy Consultants has found that more precise forecasting data might "substantially increase margins and efficiency," which would eventually reduce waste.
The report, which was produced in association with trend-forecasting company WGSN, examined how the application of such technology can help address overproduction in the apparel sector.
The study's two main conclusions were that buying more in line with consumer demand might boost contribution margins by one to three percentage points for each product category.
Additionally, it was discovered that there was a five to 15 percent decrease in overproduction each product category, translating to a three percent decrease in carbon emissions.
According to the study, firms may be able to more effectively meet consumer demand by modifying their product lines with the use of technology like artificial intelligence (AI).
Speaking on the state of the industry, OC&C’s Mairi Fairley said in the report that they speak with and work with fashion brands that are under significant pressure as the complexity of business models continues to rise, cost inflation rises, and there is a need to operate more sustainably. As a realistic first step, "evolving planning and buying to be more demand-led is a practical way to achieve big margins and minimize waste and CO2 emissions."
In addition to the areas where excess production could be controlled, OC&C's research also emphasized the ways in which the operational models of the fashion industry have been altered.
For starters, the company observed that as a result of consumer engagement and transactions across numerous physical and digital platforms, the industry's trend environment has grown increasingly complex, altering how demand is generated.
This strengthened the argument that real-time planning was required to account for shorter, more frequent purchase periods while yet allowing for improved waste management.
Shorter supply chains, however, were also emphasized in the research, which stated that brands needed to offer better flexibility and efficiency across channels and markets. This sentiment also applied to technology utilization, which OC&C claimed might boost operational efficiency.
A change has also been aided by the advent of new operating models like renting and reselling. For instance, the research states that resale accounts for 7% of market value, demonstrating the necessity for brands to incorporate this market into their own models.
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